🎁 💸 Warren Buffett's Top Picks Are Up +49.1%. Copy Them to Your Watchlist – For FreeCopy Portfolio

Pan American wins shareholder OK for Tahoe Resources takeover

Published 2019-01-08, 06:30 p/m
© Reuters.  Pan American wins shareholder OK for Tahoe Resources takeover
PAAS
-

By Ernest Scheyder and Nichola Saminather

Jan 8 (Reuters) - Pan American Silver Corp's PAAS.TO $1.07 billion cash-and-stock offer to buy rival Tahoe Resources Inc TAHO.N was approved by shareholders of both companies on Tuesday, putting responsibility for Guatemala's troubled Escobal mine in the hands of a new owner.

Pan American believes it can eventually re-open Escobal, the world's second-largest silver mine, succeeding where Tahoe has so far failed. The mine has been shuttered since 2017 amid a long-simmering feud with the Xinca indigenous population. Pan American plans to meet frequently with local communities in Guatemala to understand their concerns about the mine and try to find common ground, Chief Executive Michael Steinmann said in an interview.

"This will take a lot of listening and discussions with the communities to make sure that we understand their needs," Steinmann said. "We're very early in this process. There's absolutely no rush."

That represents a more conciliatory approach than that taken by Tahoe, which had been accused of paying too little attention to the worries of local populations. Steinmann declined to predict when Escobal could re-open.

Reno, Nevada-based Tahoe had said last autumn that it wanted to restart Escobal by the end of 2019, an aggressive timeline that activists on the ground in the Latin American country saw as unrealistic. American offered $3.40 per share for Tahoe last November, a nearly 35 percent premium to Tahoe's average share price in the 20 days ahead of the offer. 95 percent of Tahoe's outstanding shares that were voted at a special meeting on Tuesday were cast in support of the deal, with nearly all of Pan American shareholders approving the issuance of new stock to fund the transaction, the companies said in statements.

Regulators in British Columbia are expected to approve the deal later this week, with final closing on Feb. 26.

Escobal is "a world-class silver mine in terms of quality and scale," said Michael Gray, an analyst at Macquarie Capital Markets. "That's why Pan American is taking a shot to acquire it."

But the Xinca, a farming community of about 400,000, strongly oppose the mine due to worries it will harm their homeland and water.

"The Xinca aren't in opposition to the mine because it's fun," said Ellen Moore of Earthworks, an environmental group advocating for the Xinca. "They see the mine as a threat to their livelihood and environment."

Some investors considered Pan American's bid for Tahoe to be opportunistic after Tahoe's shares more than halved in the year ahead of the offer.

Silver prices Slc1 have also dipped nearly 9 percent in the past year, though they are expected to rebound more than 5 percent this year and next year, due in part to undersupply concerns.

"You can't blame Pan American for buying Tahoe on the cheap," said John Tumazos, an investor and mining analyst who owns shares in both companies.

In a sign of Wall Street's mixed feelings on the deal, Tumazos said he voted his Tahoe shares against the deal but his Pan American shares in support.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.